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Transcript of Copyright © 2004, The Pennsylvania State University. All rights reserved. Penn State is committed...
Copyright © 2004, The Pennsylvania State University. All rights reserved. Penn State is committed to affirmative action, equal opportunity, and the diversity of its workforce.
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Planning for Business Success
Tom Ford, Lynn Kime & Jeffrey Hyde
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Take Home Points
• Planning is essential,
not difficult
• The process is easily understood
• Put it in writing
• Be consistent with family plans
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Success Is Difficult to Achieve!
5 Attempt
1Succeeds
New Business
3Attempt
1Succeeds
New Food Product
Only a 20% success rate Only a 33% success rate
Adapted from: http://www.msue.msu.edu/valueadded/ and the “Why Business Go Under” Handout from the PSU SBDC
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Think About Vacation…
There are thousands of possible destinations
Hawaii
Europe
Asia
Florida
California
Myrtle Beach
Cooperstown
New York City
Colorado
Mexico
Africa
Hometown
Chicago
Canada
Las Vegas
Alaska
The Poconos
The Caribbean
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Think About Vacation…
There are thousands of possible destinations
Hawaii
Europe
Asia
Florida
California
Myrtle Beach
Cooperstown
New York City
Colorado
Mexico
Africa
Hometown
Chicago
Canada
Las Vegas
Alaska
The Poconos
The Caribbean
How Do You Choose?
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Think About Vacation…
Think about the “resources” you have at hand…
• Money
• Time
• Knowledge
• New child?
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Think About Vacation…
Think about “outside” things that may affect decision
• Gas Prices
• Terror Threats
• Airline Price Wars
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Think About Vacation…
Based on this information, you choose Florida as your destination
Hawaii
Europe
Asia
Florida
California
Myrtle Beach
Cooperstown
New York City
Colorado
Mexico
Africa
Hometown
Chicago
Canada
Las Vegas
Alaska
The Poconos
The Caribbean
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Think About Vacation…
Think about what you must do to get there…
• How to travel?
• Where to stay?
• How to get around?
• Where to shop?
• Where to see baseball?
• Where to fish and water-ski?
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Think About Vacation…
Assign tasks to family members…
• Dad: plane tickets,rental car, and rooms
• Mom: “Antique Row”• Kids: Internet research
– Seminole Lake– Disney World– Tampa Bay Devil Rays
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Think About Vacation…
Evaluate your trip…
• Would you go back to Florida?
• Would you take the same airline, stay at the same hotel, rent from the same car company?
• Would you try a different shopping location?
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Define your Mission
This family stressed FUN ontheir vacation.
A business’s mission may stress type of business, shared values, and desired outcomes, such as profit growth.
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Assess Your Situation
Look “inside” at your resources.
Are there strengths to build on?
Are there weaknesses that must be addressed?
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Assess Your Situation
Look “outside” at your environment.
Are there opportunities to pursue?
Are there threats that maypose risks?
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Assess Your Situation
Assessment of strengths, weaknesses, opportunities, and threats known as “SWOT Analysis.”
Strengths and weaknesses refer to factors within the business
Opportunities and threats refer to factors outside the business
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Set Objectives and Goals
Objectives Goals
1. Spend 2 days at Disney World
2. Take in Devil Rays game
3. Spend a day shopping at “Antique Row”
4. Spend a day on Seminole Lake
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Set Objectives and Goals
Objectives are general statements, without associated timeframe
“We will increase our sales.”
Goals are more specific, with a timeframe and measurable target.
“We will grow produce sales to restaurants by 25% in 2005.”
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Choose Strategies and Tactics
Possible Strategies
Travel – Air, Car, Bus, Hitch hiking
Accommodations – Camping, hotel, motel
Getting around – Own car, taxi, rental car
Shopping – MANY
Baseball – Orlando Sun Rays, Tampa Bay Devil Rays, Sarasota Red Sox, Tampa Yankees, Brevard County Manatees…
Fishing and Skiing – MANY
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Choose Strategies and Tactics
Chosen Strategies
Travel – Air
Accommodations – Hotel
Getting around – Rental Car
Shopping – “Antique Row”
Baseball – Tampa Bay Devil Rays
Fishing and Skiing – Seminole Lake
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Choose Strategies and Tactics
Tactics help to achieve strategies
Tactics have name(s) assigned
Can’t simply declare, “We’re going to fly to Florida!”
1. Who will choose airline, buy tickets… and when?
2. Who will hold tickets safely?
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Evaluate Outcome
Don’t make the same mistake more than once!
Do the good stuff again!
Apply what you learned to other, non-Florida vacations
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Process in a Nutshell
• PLAN – prepare for future
• ACT – do your plan
• RESULTS – based on actions
• RECORD – make note of results
• ANALYZE – compare plan to results
• EVALUATE – need changes?
• GO TO PLAN – start again
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Vacation Versus Business
• Both require research
• Both require input from family and other
stakeholders (other management)
• Both require monitoring in case of detours
or roadblocks
• Both help you do better!
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Parts of Written Plan
• Title Page
• Table of Contents
• Executive Summary
• Mission Statement
• Objectives and Goals
• Background Information
• Organizational Matters
• Marketing and Financial Plans
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The Executive Summary
• 1-2 page synopsis of entire plan
• Last piece written
• Describes business and industry
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The Executive Summary
• Includes most important pieces of objectives, goals, strategies, and tactics
• Provides financial highlights
• Is most frequently read section
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The Mission StatementStone Barn Farm Mission Statement
Our mission is to operate a dairy farm that will provide:1. Financial success through the marketing of high quality milk.2. A high standard of living for our family and a comfortable retirement
for family farm participants.3. A rural family living environment with ample time for recreation and
personal growth for all involved.4. Opportunities for family member involvement and advancement in
the farm business.5. Recognition for accomplishment.
The farm should be comfortable to work around, be labor efficient, provide a happy work environment, and express a high degree of pride.
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The Mission Statement
• Stone Barn Farm’s is longer than ideal
• State most important goals, shared values, products sold
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Background Information
• Business’s history
• Industry’s history, trends, and expectations
• Time-consuming piece; requires research
• Gain information from many sources
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Organizational Matters
• Business structure
• Management team
• Risk management strategies
• Use outside help– Lawyer– Accountant– Insurance broker– Extension educator
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Marketing Plan
• Must match production plan
• Include marketing research
• Include marketing challenges– Production– Distribution– Consistency
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Financial Plan
1. Explain record keeping system
2. Actual and projectedA. Balance sheets
B. Income statement
C. Cash flow statement
3. Assumptions used
4. Contingency plans
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SPECIAL NOTE
Is Yours A Family Business?
Get input from entire family throughout process
Let family review written plan draft
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SPECIAL NOTE
Is Yours A Family Business?
Don’t sacrifice family for business!
Be sure business plan is consistent with family plans
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Help Is Available
Get help – both inside and outside the firm
Business consultants
Accountants
Employees
Family members
Input suppliers
County extension educatorsFinancial advisors
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Help Is Available
Ask your county extension educator for more information on this comprehensive business planning program
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Take Home Points
• Planning is essential,
not difficult
• The process is easily understood
• Put it in writing
• Be consistent with family plans
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Disclaimer
Information in this presentation is intended to be educational in nature. No specific advice is intended. For legal, financial, or other counseling, please see a professional specializing in your needed field of expertise.